The Ontario government is closing in on a plan to put a price on carbon emissions after nearly seven years of delays.
The Liberals have promised to make corporations and consumers pay for burning carbon – an effective way to battle global warming – since 2008, but have put off making a decision. However, Environment Minister Glen Murray is now working on a comprehensive plan to slash greenhouse gas emissions, and he pledges carbon pricing will be part of it.
“We’re looking at how we can transition Ontario to a low-carbon economy through initiatives such as setting a price on carbon … it will be real, efficient, effective and economically positive,” Mr. Murray, who will unveil his strategy this year, told The Globe and Mail. He said his plan will also include cleaner fuel standards and energy conservation measures.
The province committed to carbon pricing when it signed the Western Climate Initiative (WCI) with California, British Columbia and Quebec in the summer of 2008. Since then, B.C. has implemented a carbon tax that has helped slash fuel use by 16 per cent. Quebec and California, meanwhile, created a joint cap-and-trade system.
A carbon tax places a levy on every purchase of fossil fuel. In a cap-and-trade model, the government limits how much carbon a company can burn; if it wants to use more, it must buy “credits” from a company that has used less than its share.
Despite passing enabling legislation in 2009 and years of consultation, Ontario has not moved ahead with either system.
“It has been frustrating to have a commitment, to have the WCI come in, and then to not really see much happen on that front,” said Keith Brooks of Toronto-based Environmental Defence. “There’s been a long time waiting for this to come.”
Mr. Brooks and other environmentalists are optimistic the province is ready to move now.
When Mr. Murray took over as environment minister after last spring’s election, he was given wide latitude to develop a plan to fight climate change. Last November, Ontario recommitted to carbon pricing in a memorandum with Quebec. And the Premier’s office is said to be onside; among Kathleen Wynne’s chief advisers is Andrew Bevan, who helped craft former federal Liberal leader Stéphane Dion’s GreenShift policy, and once ran an environmental think tank.
“Our interpretation is that they are quite serious about doing it,” Mr. Brooks said. “Some kind of carbon pricing needs to be brought in.”
Mr. Murray is hosting a summit of subnational governments in July to help prepare for the UN Climate Change Conference in Paris at the end of the year. Provincial environment commissioner Gord Miller said he expects the province to reveal its hand before the meeting.
“Momentum is building tremendously. And Paris is a deadline. We need to get our act together this year,” he said. “It is my sense that the government is seized with this decision now.”
Mr. Murray would not say when he will release his plan. Asked why the province did not move earlier, he suggested Ontario was too busy with its other major environmental policy, closing coal-fired power plants. The province has not decided what sort of system to adopt. Both carbon tax and cap-and-trade show promise.
B.C., which imposes a $30 levy on each tonne of carbon emissions (this works out, for instance, to seven cents on a litre of gasoline) has driven down emissions without stopping economic growth. In California, which recently linked its cap-and-trade system to Quebec’s, greenhouse gas emissions dropped over the past seven years.
“Much of that reduction [at least half] had to do with the recession. But as California’s economy has begun to grow again … those emissions have not come back with it,” Dave Clegern of the California Air Resources Board, the agency that runs the cap-and-trade program, said in an e-mail. The state also has rules to make fuels more environmentally friendly and laws that require 15 per cent of new vehicles sold by 2025 to be zero-emissions vehicles, such as electric cars.
Each system has advantages. A carbon tax is simpler than cap-and-trade, and easier to administer. Cap-and-trade means politicians do not have to sell a tax to voters.
Whichever system Ontario chooses, the key is to ensure the price is high enough todrive people to burn less of it, said Matt Horne of environmental think tank the Pembina Institute.
“In terms of comparing system to system, that’s going to be the best indicator: looking at what carbon permits are trading at versus what a carbon tax rate is at,” he said.
Editor's note: An earlier version of this story incorrectly stated that B.C.'s carbon tax led to greenhouse gas emissions being reduced by 16 per cent. In fact, fuel use was reduced 16 per cent. This version has been corrected.Report Typo/Error